unequal scales

Stagnant incomes, widening gaps in opportunity based on where people live and go to school and anxiety about the impact of rapidly emerging technologies are contributing to concern about inequality, according to the Committee for Economic Development of Australia (CEDA)’s report on inequality.

Releasing 'How unequal? Insights on inequality', CEDA Chief Executive, Melinda Cilento said the report shows that despite increasing community concern, measures of income inequality in Australia have not risen since the global financial crisis.

“But there is no room for complacency. Given our economic growth in this period, there are areas where we should have made more progress,” she said.

“These include education inequality, postcode inequality and preparing for emerging risks from new technology.

“For this reason, CEDA supports calls for a regular, robust, independent evaluation of inequality by the Productivity Commission.

“After several decades of economic growth, we haven’t made inroads on entrenched disadvantage or the number of people living below the poverty line, which sits at around 13 per cent.

“At the same time we are not preparing fast enough to manage emerging risks around technology, which could compound these issues further.

“For example, gig economy workers do not have superannuation deducted by their employer, potentially exposing them to future retirement income gaps. 

“The Government should explore the adequacy of superannuation, pension and savings products for contingent workers to ensure this does not become an issue in the future.”

The potential for AI and data mining to impact the most vulnerable was also an area that needed to be tackled now, Ms Cilento said.

“AI offers huge opportunities but the community must have confidence that it will be deployed ethically and with appropriate checks and balances,” she said.

“CEDA’s report finds that government and business need to work together to adopt ethical guidelines for the use of AI, data mining and autonomous systems before larger issues emerge.

“Technology can also increase education inequality, with those with better access to technology more likely to develop the skills for the jobs of the future.

“Australia also needs to ensure our workforce has the skills to transition to new opportunities and that business can access the skills needed to make the most of new technologies and opportunities. 

“World Economic Forum research suggests that low skilled workers are on average going to require two years of additional education and two years of additional work experience to transition to jobs where they can maintain or grow their existing wages.

“We need to also examine our VET sector and its capacity to meet future training needs.

“The other key issue our report highlights is the persistence of postcode inequality across Australia.

“There are entrenched geographical pockets of disadvantage across all states and territories.

“For example, in NSW 37, or just six per cent of postcodes, account for almost 50 per cent of the greatest disadvantage in the state and the other states and territories have similar findings.

“After 26 years of continuous economic growth, the persistence of this kind of geographical disadvantage is deeply concerning.

“We need to recognise that location plays a role in equality and look at far more targeted place base initiatives.

“In addition, ensuring the adequacy of Newstart, so that it is not an entry point to deep disadvantage, is an important step.”   

Recommendations in CEDA’s report include:

  • That the Commonwealth Government request the Productivity Commission undertake periodic independent reviews of inequality in Australia.
  • Adjusting the level of Newstart payments to a more appropriate benchmark and indexation arrangement to ensure adequacy over time.
  • Implementation of place based initiatives and more targeted assistance for areas of entrenched disadvantage.
  • A comprehensive review of Vocational Education and Training in Australia to underpin future funding arrangements and ensure it can meet the training and reskilling needs of the Australian workforce.
  • The government should explore the adequacy of superannuation, pension and savings products for contingent workers and whether action is necessary to ensure sufficient retirement income for those workers.
  • Measures to address housing affordability, including a larger component of capital gains taxed, moving to annual land tax instead of transactional taxes such as stamp duty and relaxing planning restrictions to allow increased housing density.

More information and report download

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